How do companies figure out the best timing to purchase their raw materials?


Extract of key findings

  • Finding the best timing to purchase raw materials provide a great potential for savings. The opportunities of determining the best time are by far not utilised.
  • Although the majority of the companies surveyed expect a rise in crude oil price, the potentials brought by the current low price of crude oil are not sufficiently used as well.
  • To minimise the risks of exchange rate, contracts in euros are a popular tool for hedging fluctuations.

 

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More informationen about the study

Raw material buyers spend more money than necessary. This year’s survey shows that one-third of the companies did not benefit from the low price of crude oil, even though two-thirds of them expected price increases. One reason for this is a lack of knowledge about the impact of oil prices on the overall costs.

Besides crude oil prices, raw material prices generally have a significant influence on a company’s profitability. The right timing is therefore of great importance, especially in the fields of metals, energy or seasonal requirements, such as agricultural raw materials.

Half of the companies see great saving potentials in the optimisation of purchase dates. Industry journals as well as internal and external expertise is considered an appropriate source of information in order determine the right timing for buying raw materials. In addition, more than half of the respondents see the analysis of fundamental data such as inventories of producers and speculators, production capacities and macro-economic developments as useful tools.

In practice, however, only about one-third of raw material purchasers apply such fundamental data for decision making purposes.

 

 

To read the complete survey results and to get guidance for your raw materials management please download our E-book on the raw materials study 2016 here: